IEA sees Asia paying less for LNG as prices converge

* IEA sees Asia benefiting from signs of delinking from oil

* IEA says oil market well supplied, but glut not expected

By Osamu Tsukimori

TOKYO, Nov 22 (Reuters) - Asia should benefit from the
convergence of global liquefied natural gas markets amid signs
of change for its pricing structure linked to oil, the head of
the West's energy watchdog told Reuters on Thursday.

Gas has historically been pegged to the oil market through
long-term contracts, because both fuels used to be produced by
the same exporters and were often used in the same industries.

But a rising disconnect between gas and oil suppliers and
new two-way contracts between exporters and customers based on
regional gas exchanges means gas is more likely to take its cue
from specific regional prices rather than global benchmarks,
such as oil's Brent crude.

"We can see that the gas market will be converging and also
it goes for prices," Maria van der Hoeven, executive director of
the International Energy Agency, told Reuters on the sidelines
of a news conference, when asked about Asia's efforts to link
LNG prices with the U.S. Henry Hub gas benchmark.

Removing the link between gas prices and oil and moving to
so-called hub pricing would drastically cut the cost of natural
gas imports, but producer countries such as Qatar have long
opposed such moves, saying they need oil-indexed prices to
finance the huge expense of building LNG projects.

"For Henry Hub prices, you have to take into account the
transport costs, the marginal cost and so on, but the price will
be definitely lower than you are paying now," Van der Hoeven
said.

LNG is expensive in Asia, fed partly by Japan's
need for fuel to run power stations after most of its nuclear
plants were shut following last year's massive earthquake.

It is nearly four times the cost of natural gas in
the United States, where a boom in shale oil and gas has driven
down prices.

Van der Hoeven's comments come amid signs that Asia's
energy-hungry nations may finally be making headway in their
push to scrap oil-linked pricing of natural gas.

Cheniere Energy has struck long-term deals to supply
South Korea and India from the Sabine Pass project at Henry
Hub-linked prices. Kansai Electric also secured BP's
non-U.S. LNG supplies at Henry Hub-linked prices, likely
to be the first time for a Japanese firm.

Van der Hoeven was in Tokyo to meet Japanese trade minister
Yukio Edano and attend a World Energy Outlook presentation.

OIL MARKET WELL SUPPLIED, GLUT NOT EXPECTED

Separately, Van der Hoeven told a news conference on
Thursday that world oil markets were well supplied, despite the
loss of around 1 million barrels a day of crude from Iran.

Brent has stayed above $100 a barrel for most of
this year, boosted by concerns over supply disruptions after the
United States and Europe slapped sanctions on Iran in a bid to
force Tehran to abandon its controversial nuclear programme.

"Altogether, when we look at the supply of the market, the
market is sufficiently supplied," she said. "But I agree it
would be nice if this would be reflected in the lower price."

She added, however, that the market was unlikely to see a
glut, where supplies far exceed demand.

"We project that there's such a huge growth in demand for
energy, especially in emerging countries, that a real glut will
be something that is not to be expected. Let's be honest about
that," she said.

A recent spike in tension in the Middle East, following air
strikes by Israel on the Gaza strip and Palestinian rocket
attacks, has for now had no impact on the IEA's outlook for oil
market fundamentals, she said earlier this week.

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